Oregon’s governor has approved a controversial bill that reduces the size of a pending 2020 tax rebate for taxpayers.
H.B. 2975 will have the effect of shrinking the size of Oregon’s “kicker” personal income tax refund residents will receive next year by roughly $108 million. State Republicans argued the legislation violates the spirit of the kicker rebate law — a constitutional provision that returns money to taxpayers when revenue exceeds projections — but Democratic lawmakers disputed that characterization of the bill, and Gov. Kate Brown (D) signed the legislation April 10.
Specifically, the legislation cancels planned transfers of money to Oregon’s general fund from other state funds that were authorized when lawmakers approved the 2017–19 biennial budget. At the time, lawmakers thought that money — $108.3 million — would be necessary to tide the state over, but Democrats argued revenue growth has since made the transfers unnecessary. Instead, that money would come from the state’s current surplus, reducing the amount that would otherwise go back to taxpayers as part of the kicker. Recent estimates put the total kicker amount — before H.B. 2975’s approval — at approximately $750 million.
Republicans argued in early April that the bill unfairly seized revenue intended to go back to taxpayers by instead saving the other state funds originally planned for transfer.
Oregonians “work hard for their money,” said Senate Minority Leader Herman E. Baertschiger Jr. (R) in April 1 remarks just before a Senate floor vote on the bill. “Are we as careful with their money as they are?”
Democratic lawmakers, however, argued the fund transfers were only approved in the 2017 budget legislation because revenue projections at the time suggested the state wouldn’t have enough money to balance the budget without using those resources. Since state tax revenue is now well over projections, that revenue should go toward the state spending lawmakers approved in the budget without requiring the use of other state funds, they said.
“The timing of the transfers was set late in the biennium in case the transfers were not needed for the final legislatively approved budget,” said Sen. Betsy Johnson (D) during the April 1 floor discussion.
The kicker was established in 1980 and is triggered when projected revenue is exceeded in a biennium by over 2 percent, resulting in the surplus being refunded to taxpayers. The rebate was subsequently inserted into Oregon’s constitution in 2000 via ballot measure and was later modified so that it applies only to personal income tax dollars, not corporate income tax revenue. The kicker remains a point of contention in the state, with tax watchdogs arguing that it puts pressure on lawmakers to rein in spending while progressives counter that it unduly restricts the ability of lawmakers to use surpluses to shore up the state’s finances. Notably, the kicker was activated in 2015 and 2017.